FAT Brands Inc (NASDAQ:FAT) is planning an IPO for its Twin Peaks restaurant business. According to analysts, this will highlight the “significant value” of its assets.
FAT said in a statement Tuesday that Twin Peaks’ IPO is intended to create value for its shareholders and help enable continued strong growth of the restaurant chain and market segment.
“Twin Peaks has been an exceptional acquisition for us in 2021,” commented Ken Kuick, Co-CEO and CFO of FAT.
“We believe that the formation of a separate public company provides the best opportunity to further strengthen the brand, capitalize on its expansion plans and extend its position as a leader in the sports lodge dining category.”
Analysts at Noble Capital Markets agree, maintaining an Outperform rating and a $25 price target on the stock.
They found that applying the multiples that restaurant chain Cava Group is targeting with its just-announced IPO and the multiples that Portillo’s Inc. achieved in late 2021 would put FAT’s “crown jewel” value at more than $1 billion based on estimate for 2026 suggests adjusted underlying earnings (EBITDA).
“We believe that an IPO is only an option for management to create value for shareholders,” the analysts wrote in a note to clients.
“Other options could just be an outright sale of the entity or a spin-off of the business to existing shareholders. We believe each scenario will highlight the significant value of FAT Brands assets.”
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